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Nine Out of Ten Small Business Owners Have No Inkling About Small Business Insurance! (Track This Article)

There are several factors that you should take into account when determining what forms of insurance coverage you need: how large or small your small business is, how it's organized (partnership, sole proprietorship, corporation, LLC), the number of employees, how you get paid (commissions, salary, fees), whether your small business is service or product oriented, your exposure to liability and location.

Things that you should consider:

Heaven forbid, but do you have more than enough insurance to protect your spouse and children? Why is this so important? Well, if you have a small service oriented business, it will be worth $0 when you die. Doctors and lawyers are the best example of this because when they pass away, the spouse can't sell the service or the clients (the real meat of the small business.) All they can sell is the equipment that was used for the small business. Get a crystal ball and see into the future to know when you are going to die then you could sell your small business before you kick the bucket. Otherwise, all small service business owners should protect their families with a minimum coverage of 7X gross income.

If your goal is to have a member of your family take over your small business at your demise, are they capable (and licensed) to do so?

What happens if you get ill or suffer an injury and can no longer run your small business? Do you have disability insurance? Disability insurance will generally pay about 60% of your income for a stated period of time. The benefit may be taxable or non-taxable (depending on whether or not you deducted the premium as a business expense.)

Here's an even more important question than anything we covered before: Do you have enough "business overhead insurance" if you have any at all? While you're out of commission, who will cover the costs of running your small business like utilities, insurance and salaries? Disability Insurance will not cover your small business overhead expenses, unless it is an add-on.

Do you have business partners? If so, do you have a "Buy and Sell Agreement"? Should your partner die, you will be protecting your interest in the business. Example: your partner dies... his wife claims her share of the business. Is it in you best interest to have your deceased partner's family involved in the business? They may not know anything about how to run the business and cause huge headaches. Well, if you have this type of insurance coverage, you could avoid all of this interference by outside parties by simply buying out your partner's share of the business.

Do you have "disability buy-out coverage"? If your partner becomes severely disabled, what would you do? Do you want to keep paying him (or her) for work he cannot do, possibly for years? After a period of time, this type of coverage would force your disabled partner to sell you his share of the business, based on a previously signed equitable agreement.

Of course, it's entirely possible that none of these problems may ever come up but it's your small business after all. Now, all you have to do is speak to a professional to determine what forms of insurance coverage you need to protect your small business.

Article Castle - Articles Resources: http://www.articlecastle.com

Ed Brancheau created The Bank of Green to advise small businesses about subjects like workers compensation insurance and to help individuals build wealth through their mortgage.

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